ICT - If I Knew Then - Part 3 of 4 - How Would I Practice.srt
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ICT: Okay, folks, welcome back. This is
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part three of a continuing series of
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four videos. If I could go back and tell
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myself what I know now, again, this is a
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hypothetical conversation with my
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younger self. Purely fiction. Just to
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give you a perspective on if I tell
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myself what to focus on, when I first
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started, it would hopefully have avoided
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majority of the painful lessons and
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losses I had to incur How would I
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practice? Where do you back test daily
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setups? And I'll before I get into this,
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this whole series is really linked to
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the optimal trade entry pattern that
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I've that I've made public on my YouTube
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Channel, I've also included 20 videos of
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daily setups. So that way kind of gives
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you familiarity to what this pattern
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looks like across a wide array of
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different asset classes. But I'm
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covering a simplistic approach to how
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you should be practicing. First and
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foremost, everyone knows, broker demo
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platforms. Okay, so whenever you open up
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an account with a broker, generally they
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offer you a trial version of their
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platform. So you can test your
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strategies or whatever it is that you're
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utilizing for your framework for your
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setups. You can test drive it on a demo
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account. forex has the ability to offer
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demo accounts that for some brokers
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don't expire. And it's not a big deal.
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If it does expire. He just started
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another one. But you don't want to treat
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the demo account like Monopoly money.
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You want to sit down with it and say,
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Okay, how much of this hypothetical
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pretend money would I be utilizing, if I
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was trading, it wouldn't have been
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$50,000 to start with, and working with
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a demo with a sober mind about what
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you're doing, and building good habits
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and removing the opportunity to fall
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into bad habits. That means overtrading
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looking for setups even after you've
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made a correct decision, and the market
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shows you that you would have been
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profitable. It's not an invitation to go
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right back in the same day, to try to
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get something else because it felt good.
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You're going to fall victim to that
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early on. So to avoid all that, don't
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have it in your mindset. You have to
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take a lot of trades every single day.
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You're gonna lose a lot of money. You
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don't know it yet, but you're going to
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lose a lot of money, trying to do that.
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And third party apps like for tester and
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you can go to forex tester calm. And
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they have a medium where you can go back
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and back test strategies and such. And
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finally trading view calm today, which
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doesn't exist at the time of you coming
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up now Michael, the tradingview.com
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website offers pretty much everything
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that was available when you started,
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meta stock, super charts TradeStation
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all those things and bells and whistles
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that you're liking right now aren't
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really that important. You're going to
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focus primarily on the open the high,
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the low and the close. It doesn't feel
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like that that's where you're going to
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be heading. But eventually, you're going
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to strip all the indicators off your
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chart, Michael, and you're not even
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going to consider any of it. It doesn't
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make sense to you right now, but trust
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me everything becomes clear by not
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having anything on your charts. You
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don't have to have any overlays of your
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platform indicators you'd like
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stochastic right now, it's not going to
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ever appear on your chart anymore. You
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like MACD, it's never going to appear on
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your chart anymore. Michael. You want to
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strip the chart down and focus on the
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four price levels that is the most
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paramount. It's the open the high, the
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low and the close and looking at
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different intervals. The previous day's
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highs and lows, previous week's highs
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and lows in previous months highs and
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lows will offer a plethora of setups. It
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doesn't feel like that makes sense to
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you right now. But it will absolutely
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unlock all of the understanding that
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you'll need to carve out consistent
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steady setups. So let's go into trading
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view and look at how we can practice.
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Alright, so here is the trading view
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platform and I have the charts up With
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the euro dollar currency pair, on the
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left hand side, it is a 15 minute time
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frame. And on the right hand side, it's
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a daily chart. And the assumption is
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that we're focusing on the optimal trade
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entry on a higher time frame until it
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delivers to a key level. I'm going to
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show you right now what that would look
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like. Here we have a high that would be
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targeted. In here, as the price was
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rallying up, we can see before we got to
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this high back testing these types of
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setups is what you'd be doing. We're
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going to show a Fibonacci on this swing
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low. With this candles higher low and
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this candles higher low, surrounding
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this one particular candle. That's why
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I'm anchoring it to that. I'm dragging
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it all the way up to this candle is
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high, because it's as it's making higher
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highs. I'm going to overlay the fib On
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every successive higher high, because
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that's going to be the range in which
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any retracement comes it'll be within
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that range. And it'll be apparent when
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you see it here. So we draw this up. So
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that Okay, so you can see the Fibonacci
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that's anchored from this low up to this
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high. It captures this retracement of
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this candle right here is the 10th of
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July 2020. Here's the 10th. On the 15
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minute time frame, you can see how the
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15 minute time frame drops down into the
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optimal trade entry. Which is the 60 to
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70 retracement level and 70.5 sweetspot.
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This level is going to be one of the
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levels you're going to like a lot but
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you'll save yourself a lot of
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frustration if you just use the 62%
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retracement level Michael. Most of the
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trades that you're hunting in these next
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couple years are going to be unwilling
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to trade at a 70.5 or even 79%
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retracement level but he would just
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simply use the 62% retracement level and
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defer The insatiable desire for you to
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find the perfect entry all the time
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later on in your 40s you're going to
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feel real comfortable with not having
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the absolute best entry and the absolute
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best exit. There's lots and lots of
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opportunity in between. So 62%
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retracement level on here is ideal and
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we can actually see a key reaction off
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of that 62% retracement level price
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starts to move higher. Now, your focus
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is to imagine every daily candle moving
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higher. Open, near the low of the day,
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close near the high the day. Up close is
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the mode of delivery. We're expecting
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until we get to this high. So when we
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get up to it and through it. Okay,
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remember that slogan to it and through
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it to it and through it. That's how
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you're going to find the easiest bread
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and butter setups. There is In every
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market asset class, the idea is the
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framework is this optimal trade entry is
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going to keep delivering until we get to
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this high and slightly above it. Here is
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one half a standard deviation, and it's
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calling for 114 46 and two puppets.
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Okay? The actual high of this price
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when, as of the time of this discussion,
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the high comes in at 114 52. And one bit
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that so it goes a little bit above that,
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but that's a good idea as a target, if
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not just simply at the old high. Now,
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we're going to take our concentration
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away from the daily chart because we can
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clearly see with the benefit of
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hindsight here that we had a series of
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up close candles, and each day you'd be
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hunting a New York setup. Now this is
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going to be the easiest framework,
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Michael, if you just submit to it early
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on, stop trying to find trades outside
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of this timeframe. focus in here and
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you're gonna To find everything that you
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would ever need. So all of our attention
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is going to go over to this chart here.
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So scrubbing forward a little bit, you
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can see the daily dividers. And what
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you're going to do is you're going to
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take a line segment, you use a rectangle
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if you want. And you're going to
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delineate on the chart each day 830 to
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11 o'clock in the morning, New York
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time. So when you study this time,
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you're going to be able to see a
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retracement lower, because remember the
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framework is every day the daily candles
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are going to go higher. That is what
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your job as the power three.
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This high is going to be attacked, but
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each day is going to be accumulation,
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manipulation and distribution. The
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accumulation is going to be near the low
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the day they're accumulating long
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positions. You're going to see that
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movement up going into New York, New
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York session is 830 to 11 o'clock. As
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the market retraces lower in there,
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inside that consolidation and
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retracement you're going to find a five
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minute optimal trade entry. That means a
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low swing high down in that doesn't take
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out the previous swing low trades to the
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62% retracement level, your stop would
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be below the low that creates the
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optimal trade entry. You'd go long at 62
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plus spread and reach for previous day's
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high or a combination of that and the
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standard deviations on the Fibonacci
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that mean like this is one standard
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deviation. This is one half a standard
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deviation and so on. So each day you can
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start to see and back test how many pips
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that using the 62% retracement level
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would give you plus the spread for your
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entry that you would have risked to get
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that trade on and how many pips it
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delivered how long the trade took from
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entry. To delivery to your target. How
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much of a drop down did each setup take?
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You want to consider that because if you
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have a large sample set of data, not
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every trade is going to start and turn
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right at the 62% retracement level, you
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might have to incur some drawdown. And
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don't make a big deal of it, Michael,
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because you're going to have a lot of
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trades. And they're not always going to
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be reacting as soon as you get in many
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times. The fact that they don't react
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right away is indicative of you being of
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you being offside and it's probably
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better for you to just kill the trade
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all together. But that's another lesson
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the whole time. The next day, again, 830
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to 11. You're going to look for the
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price structure that London creates a
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run and then a retracement down into
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between 830 and 11. This is your optimal
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trade entry. And when you see that
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against you Students are chasing a level
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aiming for a previous day's high
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previous day's highs here. So you're
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gonna aim for a run through that and
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then add your standard deviations on
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your Fibonacci tool for targets. same
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premise. How long did it take you to get
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to profitability and cover the dealer
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spread? How many pips Did you encourage
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draw down? How much time did it take to
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get to target all of that is building up
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a sample set of backlogs. This backlog
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is what you go back through and study
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for a hindsight derived experience. And
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by doing this, it will program your
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expectations to not perfect but it will
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also show like we're showing here an
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instance where an optimal trade entry
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doesn't really necessarily form and even
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if you use this one and down in getting
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in long, your stop below this would have
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been tagged. So you would have a loss.
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So how much time did you take? Before
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getting stopped out? How many pips did
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it move against you from your initial
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entry and how it traded for the day. All
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of these ideas, give you again,
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perspective. If you would have held on
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to this trade, and didn't use a stop
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loss, or kept moving your stop loss down
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as you will have done, because you've
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made those mistakes early on already.
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And you're going to make those mistakes
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for another year and a half, because
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you're going to wrestle with the idea of
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being right. It's not about being right,
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Michael, it's about being consistent and
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flexible. When you can see the signals
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that are indicating you're wrong or
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offside. You have to kill it. Don't arm
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wrestle it. There's so many
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opportunities. If you try to blow your
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account on one particular trading day
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because you can't accept the fact that
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you were wrong. You can't accept it,
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you're human. And you're going to
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struggle more you have to and that's why
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I'm talking to you right now. I don't
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want you to go through all that because
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At 47 turning 48 soon these problems
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that you're going to encounter if you
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don't listen to me are still going to be
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painful to relive or remember
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how much information do you use from
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this bad example? In terms of
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profitability, but good example for
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learning. You don't want to torture
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yourself and say, Well, I was stupid
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because it was really screaming against
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me or I should have saw these multiple
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attempts to go higher and and break
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down. I just picked a really bad trade
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and I was foolish, resilient, don't do
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those types of things. Michael, don't
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fill your journal up. with toxic
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thinking. You're going to fill up the
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first three years of journals with a lot
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of things that are going to be linked to
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your subconscious. And you're going to
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look at the markets and you're gonna
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remember, and this looks like that time
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I lost X amount of money and didn't use
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a stop or I didn't Get out when I should
333
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have gotten out and you're reliving all
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those painful moments that you've
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journaled. You're going to use your
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journal to have positive, constructive,
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not negative criticism, but positive
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criticisms. It's important for you to
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frame your annotations in your journal
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in such a way that there's no emotions
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whatsoever. None. But you still want to
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pull out the information that's salient
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to the lesson because when you're wrong,
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you need to study what led to you being
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wrong. So that way, eventually, you're
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going to key up on the things that
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you're doing that are problematic, and
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you're falling victim to over and over
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00:15:40,289 --> 00:15:42,179
again. But until you study them with a
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sober mind, and objectively, you're
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going to keep falling victim to it and
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you're not gonna understand why it's
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happening. Not only will you lose a lot
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of money, but you're going to have a lot
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of frustration that's completely
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avoidable if you just do that this gave
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you right now. The next day, same thing,
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we're not looking For every single day
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to be a winner, we're expecting it's
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going to be a trade there may not pan
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out. But we're staying with the same
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narrative we're looking for this day.
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Here's a 16th. And that is on the daily,
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00:16:16,919 --> 00:16:19,319
right here, that's this day here. Now
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that's a down close candle. When you see
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this, okay, you're going to see this
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00:16:24,419 --> 00:16:26,069
high and the next candle has a lower
368
00:16:26,069 --> 00:16:28,949
high, that swing high is gonna make you
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00:16:28,949 --> 00:16:32,219
think early on that it's creating a top
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and there's no more buy signals to take.
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Don't believe that. Just because it's
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00:16:37,049 --> 00:16:38,309
making a swing high doesn't mean it's
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not going to likely give you another
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buying opportunity. Even on that
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particular day, it gives us an optimal
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00:16:44,009 --> 00:16:46,829
trade entry here. And you want to study
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again 62% retracement level. How much
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00:16:49,559 --> 00:16:50,669
time did it take to cover the long
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00:16:50,669 --> 00:16:53,219
spread and move to target? How many pips
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00:16:53,219 --> 00:16:55,769
to offer. And even though it didn't get
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to the previous day's high by taking out
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scaled profits, you don't have To be
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00:17:00,899 --> 00:17:03,479
right about the next trade running to
384
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the previous day's high when you're
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00:17:04,439 --> 00:17:07,589
bullish, short term highs in here as it
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00:17:07,589 --> 00:17:10,019
runs up, you want to take profits off
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00:17:10,049 --> 00:17:12,449
there. And when you back test and
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practice, you would be doing the same
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00:17:14,369 --> 00:17:16,349
thing. Assuming that if you were in a
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00:17:16,349 --> 00:17:17,609
trade, you would take something off
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00:17:17,609 --> 00:17:19,079
here, and you'll take something off
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00:17:19,079 --> 00:17:21,329
here. And as it goes up into this area
393
00:17:21,329 --> 00:17:23,729
over here, you may have been expecting
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00:17:23,729 --> 00:17:25,289
it to trade above here, but in this
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00:17:25,289 --> 00:17:29,249
case, it turns around. How much time did
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00:17:29,249 --> 00:17:32,069
you stay in the trade? While it was
397
00:17:32,069 --> 00:17:35,099
dropped, dropping down here? How long
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00:17:35,099 --> 00:17:36,569
would you expect to hold on to that
399
00:17:36,569 --> 00:17:37,979
trade before you realize that you were
400
00:17:37,979 --> 00:17:42,119
wrong? and be honest about it, because
401
00:17:42,149 --> 00:17:44,429
what you pour into your back testing and
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00:17:44,429 --> 00:17:47,549
practicing, while it's hindsight, if you
403
00:17:47,549 --> 00:17:50,039
are not honest with yourself, if you put
404
00:17:50,039 --> 00:17:53,219
in poor expectations, you're going to
405
00:17:53,219 --> 00:17:56,969
get ridiculously backwards results.
406
00:17:57,029 --> 00:17:58,499
You're going to expect certain things
407
00:17:58,499 --> 00:18:00,689
that aren't realistic to see in terms of
408
00:18:01,289 --> 00:18:04,319
outcome. And you're going to be at the
409
00:18:04,319 --> 00:18:07,499
mercy of your emotions. And you're going
410
00:18:07,499 --> 00:18:09,419
to be pulled around by a psychological
411
00:18:09,419 --> 00:18:11,369
tug of war about being right or wrong if
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00:18:11,369 --> 00:18:14,339
you don't do these things. So next day
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00:18:14,339 --> 00:18:16,679
even though we had a losing day here in
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00:18:16,679 --> 00:18:18,539
this trade while it was profitable, it
415
00:18:18,539 --> 00:18:19,919
didn't deliver to the previous day's
416
00:18:19,919 --> 00:18:22,439
high, it's fine. You stick with the
417
00:18:22,439 --> 00:18:26,189
narrative. Next trading day. Here it is
418
00:18:26,219 --> 00:18:28,559
830 to 11 optimal trade entry, it's
419
00:18:28,559 --> 00:18:30,149
dropping down, and it gets us to
420
00:18:30,149 --> 00:18:32,309
opportunities it drops into it here and
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00:18:32,309 --> 00:18:34,049
gives us another one here, and then
422
00:18:34,049 --> 00:18:36,269
takes out the previous day's high here.
423
00:18:37,289 --> 00:18:42,209
So we have now delivered a setup that
424
00:18:42,209 --> 00:18:44,399
takes out the previous day's high. And
425
00:18:44,429 --> 00:18:46,019
this is Friday, so you can't trade the
426
00:18:46,019 --> 00:18:48,119
next day. It's a Saturday, but how many
427
00:18:48,119 --> 00:18:52,259
pips did it take from entry to scaling
428
00:18:52,469 --> 00:18:54,209
at your previous day's high how many
429
00:18:54,209 --> 00:18:56,099
pips was that? How much time did it
430
00:18:56,099 --> 00:18:58,289
take? How many pips did you have in draw
431
00:18:58,289 --> 00:19:02,519
down? All of those ideas, you build a
432
00:19:02,519 --> 00:19:05,129
backlog of, and then on the weekends,
433
00:19:05,459 --> 00:19:08,129
you want to study how each one of these
434
00:19:08,219 --> 00:19:10,229
work together to complement one another.
435
00:19:10,229 --> 00:19:10,739
In other words,
436
00:19:11,010 --> 00:19:12,930
how did the previous day's trading set
437
00:19:12,930 --> 00:19:15,300
up the situation you saw on the next
438
00:19:15,300 --> 00:19:18,330
day, and look at it from a hourly
439
00:19:18,330 --> 00:19:21,060
perspective, a daily perspective, and
440
00:19:21,060 --> 00:19:22,980
it'll help you frame out the
441
00:19:23,010 --> 00:19:24,480
institutional order flow that you'll
442
00:19:24,480 --> 00:19:27,270
become known for in the Forex division.
443
00:19:28,110 --> 00:19:31,230
So in this case, following this
444
00:19:31,230 --> 00:19:33,540
criteria, and practicing every single
445
00:19:33,540 --> 00:19:35,250
day, just keeping a backlog of it,
446
00:19:35,730 --> 00:19:37,620
you're going to not only train yourself
447
00:19:37,620 --> 00:19:39,270
to see the setup, but you're going to
448
00:19:39,270 --> 00:19:40,950
grow in your understanding about how the
449
00:19:40,950 --> 00:19:43,620
characteristics repeat over and over and
450
00:19:43,620 --> 00:19:45,690
over again, and staying with just one
451
00:19:45,690 --> 00:19:48,840
currency, but framing all the ideas on a
452
00:19:48,840 --> 00:19:51,690
higher timeframe basis. That leads to
453
00:19:51,720 --> 00:19:54,180
high consistency without having to need
454
00:19:54,360 --> 00:19:58,620
perfection. So hope you found this one
455
00:19:58,620 --> 00:20:00,450
insightful, I will be back again Next
456
00:20:00,450 --> 00:20:02,610
week with the final portion of the
457
00:20:02,610 --> 00:20:05,190
series, how to transition into practice
458
00:20:05,190 --> 00:20:07,320
into live funds. Until then, I wish you
459
00:20:07,320 --> 00:20:08,370
good luck and good trading.